Carbon tax: the policy and the politics

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This is a better package than the CPRS it is so closely modelled on, but not by a lot.

The key problem with the CPRS was that compensation for emissions intensive industries was so great and went for so long that it neutered the price signal, meaning the entire scheme was a giant money circulator that wouldn’t have started decarbonising the economy until well into the 2020s.

The same levels of assistance will apply to big polluters again, but this time the Productivity Commission will be on the case to review whether the assistance is justified and there’s an in-built bias toward reduction in assistance to the levels proposed by Ross Garnaut in his updated report if the PC agrees. But big polluters have a guarantee that their assistance won’t be cut until at least 2017, although the PC can start its 2014-15 review early if it believes there are industries making windfall gains from compensation.

In which case, the PC should start today, because it’s the scheme is a bonanza for big polluters.

There will also be an independent body to examine the case for accelerating Australia’s laughably unambitious target of 5% by 2020. The Climate Change Authority should become a potent independent source of advice that will pressure future governments inclined to recalcitrance in the key issue of how quickly we proceed with decarbonising the economy. In this regard, the increase in Australia’s emission reduction target from 60% to 80% by 2050 will become increasingly important.

So two independent sources of pressure on future governments to improve this scheme in its two critical features: how much the price signal is neutered by compensation, and how fast we should be reducing emissions. The effectiveness of these two bodies in making the case for harder and faster progress will determine the effectiveness of the scheme. Yesterday, the Greens were fairly sanguine about that, suggesting that between the 80% target and the sheer volume of money being spent on renewables, going faster won’t be a problem. We’ll see.

The other key advantage over the CPRS is the use of tax cuts aimed at addressing EMTRs for low-income earners. This isn’t merely sensible policy, it’s actually consistent with the government’s own reform efforts so far under Julia Gillard, aimed at increasing workforce participation. The Government has correctly picked up, at least partly, on Ross Garnaut’s recommendation that the Government try to get more bang for its microeconomic buck by using compensation to improve Effective Marginal Tax Rates.

That’s the good news.

The bad news is that, like the CPRS, the biggest polluters will get the biggest handouts. The coal industry will get a staggering $1.2 billion from taxpayers in straight cash – an outrageous cave-in to the industry that is responsible, more than any other, for Australia’s contribution to global warming. The steel industry will get $300 million plus an increase in free permits above and beyond the 94.5% it will already get.

And the Clean Energy Finance Corporation may turned out to be problematic. Why is a government investing directly in an industry? What at happens if and when investments in renewables and low-emissions technology go bad? On the other hand, like the new ARENA, having industry and financial expertise guiding government spending on renewables rather than bureaucrats and ministers might achieve more than years of sub-par renewables industry policy has.

And buying abatement from the electricity sector is the kind of policy garbage we’re used to from the Opposition — clear government winner-picking. It’s an implicit acknowledgement that a low carbon price and heavy compensation won’t drive a rapid transition to less emissions-intensive electricity generation.

Indeed, courtesy of the Greens and a low carbon price, between the purchase of electricity generation abatement, the investment in renewables and the Government’s carbon farming initiative, there is much “direct action” about this plan. That means taxpayers will, yet again, be spending far too much to buy abatement – although this lacks the sheer lunacy of Greg Hunt’s “soil magic”, a plan in which the majority of Australia’s carbon abatement task would be achieved by a process owing more to Old Moore’s Almanack and biodynamic farming than science or economics.

Will it be seen as a serious contribution to the cause of an international agreement on climate change? Yes.

Will it enable Australia to reduce its emissions by 5% by 2020? That partly depends on the PC and the new Climate Change Authority. If they recommend cuts in assistance and more ambitious targets, and governments accept those recommendations, yes.

Is the industry compensation fair? In the case of the coal industry, far from being fair, it’s an almost criminal act of fiscal indulgence. In the case of the more-deserving steel industry, the support goes overboard into outright protectionism. The package is no better than the CPRS and in some ways worse.

Is the household compensation fair? On the whole, yes, and efficient, too. There could be less indulgence of middle-income households, but this is a big improvement on the CPRS.

Does it provide for future adaptation or funding for overseas victims of climate change? No, but then these issues just aren’t on the policy radar currently.

I thought the CPRS was a wretched package that didn’t deserve to be passed. This is a better package on the whole, but that is conditional on the ability of the PC and the CCA to embarrass future governments into better policy. It’s a lineball call, but on balance, it deserves passage, especially since it’s the only serious game in town for this generation of politicians.

The politics …

This is about as voter-friendly a package as you can get while still doing something about climate change. With tax cuts for low income earners, generous overcompensation for pensions recipients and handouts to rentseekers to mute claims of job losses, the package minimises the potential for scare campaigns and special pleading.

As we all know, this government is so inept it’s likely to botch the selling of the package and leave people convinced they’ll be ruined by it.

Still, by targeting assistance at the steel industry, the coal industry and the coal-reliant electricity sector, Labor is keeping one eye on its heartland, even if it will have trouble with the road transport industry (which is still getting a good deal under road pricing arrangements). The government wants to extend a carbon price to heavy vehicles in 2014 but this has not been agreed by the Multi-Party Committee on Climate Change (read, the independents).

And the package relies far more heavily than the CPRS did on tax cuts to deliver compensation, giving the government a potent selling point — two, actually, because the lift in the tax-free threshold will be over two years.

Expect the opposition, though, to emphasise that the current 30% tax rate will be going up, even though no one will be out of pocket and most people up to very high incomes will come out ahead, albeit only marginally for higher earners.

The package also defers some of the politically difficult decisions. The PC will review compensation for industry in 2014-15, and there’s no way it will conclude that the absurdly generous arrangements in this package are justified. And Bernie Fraser will be at the head of the new Climate Change Authority, presumably making the case that the wide range of actions being undertaken overseas mean Australia has no choice but to lift its target from 5%.

But the basic political issue was resolved on Friday, not today. That’s when Andrew Wilkie said he’ll be supporting the package. With his support, and that of the independents and the Greens, this package will become law. Australia will have a carbon price in less than 12 months.

However well or (more likely) poorly the government sells this package over the next fortnight — and Julia Gillard’s performance in that period is crucial to her leadership — the future of this government, whether led by her or not, will depend on the implementation of this package. That’s a point it never reached under Kevin Rudd.

151 thoughts on “Carbon tax: the policy and the politics”

Thanks for giving up your Sunday Bernard, and giving us a straight assessment of this proposed legislation. Most of us knew it would be full of questionable compromises, but given the appalling state of politics in this country could hardly expect better.

Steel: “this is straightforward protectionism designed, under the cover of a carbon price, to support a domestic industry against cheaper, more efficient (and no more carbon-intensive) foreign competition.”

Correct. Again, Labour’s dilemma exposed. The Whyalla Syndrome.

So what would you do, Keane? You’re a global warming zealot- would you promptly close down steel, aluminium and zinc processing? They’re going to die anyway…so let’s do a Thatcher, shall we? Or perhaps you don’t really have the stomach for the Indonesian abattoir solution…

“The Clean Energy Finance Corporation may also turn out to be a problem for future governments if and when investments in renewables and low-emissions technology go bad.”

They’re going bad now. Billions wasted on useless wind turbines. British power companies are demanding $10 billion from the govt. for back up gas power stations to cover wind’s naked arse:

“In winter, when the most intense cold period coincides with a high pressure front, most wind turbines do not work.
One industry executive said: ‘Why would we build a power station – costing about £600 million – that is guaranteed to make a loss because it is not used most of the year?’
By 2020, most of Britain’s nuclear plants, old gas-fired plants and coal-fired power stations will be closed, leaving a 30 per cent energy gap to be filled by more new nuclear plants and more wind power.
British Gas managing director Phil Bentley has warned prices will have to rise by at least 15 per cent to compensate for the soaring cost of wholesale gas.””
(ThisIs Money website)

Pensioners can be compensated where necessary, but the unemployment rate in this country is the envy of the world. As THETRUTHHURTS says, there are high-paying jobs out there, people just need to stop expecting handouts, complaining about this that and the other and put in the hard yards.

The economy should be based on innovation, investment and hard work to back it all up… not handouts! I’ll take a two-speed economy over a no-speed economy any day.

I’ve done the calculator … as a self funded retiree under 65 I get zilch (unless I get some CPI indexation, it is not clear if will be counted or not), and my part-time working wife gets some compensation – but we are behind overall.

I am still a supporter of the initiative as it was never about how much I could get.

[Tax free threshold is increased but 37k-80k tax rate goes from 30% to 33%. So everyone gets the threshold reduction, but then some start to pay more – explains why no benefit for someone earning 80k.]

When is a tax cut, not a tax cut?

When you scrap the Low Income Offset and replace it with a higher Tax Free threshold and jack taxes up on the other brackets.

I couldn’t quite work out why on the government website why low income earners were only making a few hundred dollars more despite the tax free threshold decreasing someone making $18,200 tax by $1830.

Well it appears the government it looks like the government is scrapping the low income tax offset. This was worth $1500.

Probably not a bad thing, but the increase in the tax rate from 30% to 33% is where the real devil in the detail is. We will start to see bracket creep of a lot of low income earners breaking into the 37K bracket and middle income earners going past $80k in the following years.

Also there is a lie going around by the government that only people over $80K will be worse off, but the calculator on their own website says the carbon tax will start hurting for singles at $50K. In other words, this is a TAX INCREASE for all those earning over $50K a year, which would be a good portion of the public.

I see the LolStralian is bleating that PEOPLE WILL ONLY BE 20c PER WEEK BETTER OFF.

Wasn’t it yesterday that it would be the end of the world and that we’ll all end up in pauper’s graves.

My verdict: A resonable compromise that puts in some infrastructure to help with the required economic restructuring that’s 20 years overdue. You can see the mark of the greens on it, CCS is out, coal compensation is contained, some attempt at a regulator with teeth, and de-politicising the renewable energy investment mechanisms.

Thanks for the insight Bernard, I have to agree but for one thing: energy efficiency. The policy paper appears to have completely scrimped on household energy efficiency measures and the attendant white paper scheme:

“As recommended by the Prime Minister’s Task Group, the Government will undertake further consultation and design work on a national energy savings initiative.”

For crying out loud, the closing time for submissions to the taskforce was June 2010, and it presented its findings to government late last year! It was a damn comprehensive review, and there are schemes in place already in NSW, Vic & SA that could be rolled out nationally in no time at all. Instead we get this:

“Subject to economic modelling and a regulatory impact analysis, the Government will make a final decision on whether to adopt a national energy savings initiative. A national energy savings initiative would be conditional on the agreement of the Council of Australian Governments and the abolition of existing and planned state schemes. ”

[My verdict: A resonable compromise that puts in some infrastructure to help with the required economic restructuring that’s 20 years overdue. You can see the mark of the greens on it, CCS is out, coal compensation is contained, some attempt at a regulator with teeth, and de-politicising the renewable energy investment mechanisms.]

How much will this tax reduce global temperatures and what guarantee’s are the Greens and Labor giving that worldwide emissions won’t actually increase because of the tax?

Dirty Chinese polluters will now have a huge competitive advantage over environmentally friendly local manufacturers. It’s just a matter of logical FACT.

Regardless of whether you believe in climate change or not here’s the rub.
The technology of renewable energy is now advancing at an exponential rate, much like computers. You can’t change that fact. It’s a known entity.
As a country you have two choices. Either you embrace the inevitable change and steer your economy to maximise the potential gains, or put your head in the sand and prop up business as usual.
To use the computer analogy once more, there aren’t too many people still making typewriters. Those that now export computers and associated software make some serious dollars.
So the long term question really is about where we want to be in the future. Buying or selling the technology.
In a world that gives you the serious option of avoiding the grid with truly affordable solar power, is “made in China” a legacy we can be proud of ?

The level of vitriol towards today’s announcement on News Ltd sites (the PerthNow’s and the like) is absolutely horrendous. There are polls on whether we should have a Carbon Tax (over 3/4 opposed) and over half saying that “Climate Change is a myth”.

Justthink: “The technology of renewable energy is now advancing at an exponential rate, much like computers. You can’t change that fact. It’s a known entity.”

If only. Renewables R and D has been neglected for decades (or, in the case of electric cars, literally crushed by Motown moguls).

Renewables today are not remotely ready for baseload. Wind is a dud, by definition, until some reasonably economic storage is developed. Solar is little better and even more expensive. For geothermal, look up Flannery’s Geodynamic fantasy, and read market analyst’s comments- and the other prospectors are doing no better. Still a pipe dream, so to speak. $100m of public money disappeared down Geodynamics hole last year…

As for tidal, check out the abandoned $80 billion Severn Barrage: dumped by London because it was unproven, insanely expensive and would wipe out the Severn wetlands.

So closing FF baseload now is premature. The sensible thing in the country is to switch to gas, which will happen to some extent because there’s no way large wind or solar plants can operate without it, but the Greens hate it.

Sooner or later, something’s going to work. Not right now. Which is why the carbon tax is fraudulent.

If I didn’t know any better I’d say THETRUTHHURTS was an alias of Terry McCrann….Sounds like a bit of tired News Limited inspired rhetoric ……..Could THETRUTHURTS please name for me an industry in which the “Dirty Chinese Polluters” will gain a competitive advantage in the post carbon tax economy they don’t currently have?

Eric: you’re wrong. Before World War Hun, the ALP adopted American spelling. Hence it is the Australian Labor Party. Horrible, but there it is. But I referred to Labour as in the labour movement. Australian English. Just like “sceptic”.

Unbelievable! The Tooth Fairy is going to take my tooth – but I’ll get ‘compensation’ when the Easter Bunny leaves me a ‘real’ Golden Egg at Easter.
All the bureaucrats who make sure this happens, will live rich and fulfilling lives and just like it was for Goldilocks, it won’t be too hot, or too cold… It will be just right!
(PS…She forgot to mention the end of world poverty)

Didn’t like that biblical quote Truthy? Too close to the truth eh?
Here, try this one.
Ecclesiastes 9.11 [KJV]

“I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all.”

Great. So Gillard has increased the tax threshold rates from 33c to 37 centsa and NOT MENTIONED IT in her fanfare and just talked about the tax free threshold increase to 18k. Very cleaver con job

Yes, what it means is for people above $80k there will be little in the way of tax cuts (about $3 per year), but for low and middle income earners, the new tax free threshold acts as a tax cut ($600 a year from somebody on $20,000, and $303 for somebody on $65,000).

This is nothing new, it has long been stated by the government that the carbon tax package would have tax cuts for low and middle income earners.

Of course, how much you pay depends on family circumstance (as always, with the Australian tax system). Families on combined incomes of up to $200,000 can still receive compensation if one of the income earners earns less than $80,000 and qualifies for the tax cut. Source

THETRUTHHURTS -I am poised with my pen and paper to tally up all the Australian jobs that are certain to appear in “dirty polluting Chinese factories” that don’t have to pay a red cent in carbon taxes………..for the task I have appropriated a postage stamp and bee’s dick to record the exodus……..come on Terry, admit it’s really you…

The Gillard Government has now increased income taxes for the first time since Keating.

And the failure of comprehension continues. Revising the tax-free threshold up while adjust the nominal tax rates up does not equal a tax increase. You need to look at the effective tax rate … you know the rate that actually matters?

Anyone else find it amusing reading the outrage from people who clearly don’t understand how our tax system works?

Every single tax payer benefits from the tax free threshold being raised to 18k, it is not until you get to around 65k a year I think that the new threshold is negated by the higher percent on the tax brackets.

Perhaps THETRUTHHURTS think the ATO neatly fits you into a single bracket at the end of the financial year and you pay one fixed tax on all your income?… If so thats not really how it works mate, they just tally it up as you go through the year paying the tax rate each week your total to date dictates.

[And the failure of comprehension continues. Revising the tax-free threshold up while adjust the nominal tax rates up does not equal a tax increase. You need to look at the effective tax rate … you know the rate that actually matters?]

Actually the rate that matters is the amount of total tax payable, and according to Dillards own carbon tax calculator singles above $50K will now be paying more in taxes, not $80K like JuLiar keeps claiming.

Citizen Murdoch mustn’t approve, just looked at Herald Sun .com.au, Shannon Deery “Carbon Tax:Heat Rises as Voters Reject Julia Gillard’s Plan” pure fantasy, shock and awe sh*t (again?),this Journalist? spins so hard I suspect Shannon Deery and Tony Abbott would win Dancing with the Stars hands down,of course conveniently underneath you can Vote, as many times as you like,I voted 3 times not a problem no scrutineers?,they held a plebiscite in four locations 4x News limited sites, and I quote:(100.000 votes of which{ 70% of voters or 15,866???} said they would vote coalition next time) that’s very creative accounting! now there’s a bit of News Limited Democracy for you,kick out Julia install my man Tony, Why? cos that’s what I want, and so do you.This mob make Richard Nixon look like Julie Andrews,More moral insanity?

Bernard is probably right that this is the best we can reasonably expect. Democracy means we can’t do things as speedily as other regeimes may be able to (China, fer instance), despite their necessity.

The ‘compensation’ for the Coal industry, in paricular, is insane, but at least it’s subject to a review in a few years.

Despite the hoopla about increasing the TFT by 300%, the taxation package still somewhat benefits Middle Class Welfare (lower-income households will have a larger [i]proportion[/i] of their income left in their pockets, however). Case in point, myself and my partner. As two single income households (just under $50k each, which we actually consider pretty well-off), we are $1 ‘worse off’ under the proposed massive, economy-shattering, creeping Secret Muslim Socialist arrangement than the existing structure. But as a dual-income household (just under $95k), we are actually $130 ‘better off’ each year!

Actually the rate that matters is the amount of total tax payable, and according to Dillards own carbon tax calculator singles above $50K will now be paying more in taxes, not $80K like JuLiar keeps claiming.

Your incredible dishonesty is getting tiresome. The rate AND the tax free threshold matters. If the threshold rises and the rate rises proportionally (as it has), then the EFFECTIVE rate is IS STILL THE SAME.

Provide a source for the your claim above or show the maths. If you can’t, we can all confirm what we have always suspected, that you are a massive troll.

Quite right. Not enough attention is paid to the subliminal messages Gillard , ummm, emits. The lower middle class harridan Thatcher grated so badly on everyone (esp. Tories) she underwent secret voice training. Some swine kept tapes and they leaked. Nail-scrapingly awful. I called it Pigmalion. Maggie ended up a ghastly parody of a Shire matron…

Gillard is also being coached. The result we heard yesterday. Voice certainly modulated in set-pieces (it reverts in less formal settings), but the cadence is fractured:
“I know. Some Australian famlies are worried. About caahbun proicing”.

Gillard’s authoritarian personality is akin to Thatcher, but Gillard is socially disconnected. She doesn’t have the usual politicians’ slimy sociability, the car salesman’s love of eye contact, the natural affability of the clubby tossers who nudge, wink, rub and bumsniff their way through life. Gillard’s social tin-ear is most evident when she touches and hugs people physically. It looks awkward and contrived. It’s also a cultural error.

Late last year and early this year, I was putting together a business plan for a small venture to sell energy efficient home appliances. I found that by introducing consumers who don’t have gas to some quite simple substitute electrical technologies for cooking and home heating, with entry level prices from about $100, easy savings of between 20 and 40 per cent of their household electricity bills could be made, in some cases more, depending on the design of your house and your lifestyle. The kind of appliances I had found would not only save electricity but in most cases give superior performance to the conventional technologies most Australians are using.

I watched with a sinking feeling as details of the package emerged, and after Sunday’s announcement, I realized the business would not be viable. I won’t be going ahead.

First of all, the kind of households I was going to target–generally middle-lower income–are being told they will be no worse off and in some cases better off under the package. The government has been adamant that consumers are not responsible for pollution. An easy sell: a new tax which won’t put you out of pocket. Of course rationally, all these people could still benefit from spending their tax breaks on electricity-saving appliance substitutes, making them even better off again. But the principle of “no pain, no gain” applies here. People are not entirely rational. If consumers are not sharing the load, I don’t see how I’ll be able to get them interested.

Second, if there had been some reduction of costs for non-polluting businesses, such as an across-the-board company tax reduction, this would have stimulated competition, enabling new entrants (like me) to make some markets more competitive and push down prices. No such luck. Even the income tax reductions will not help businesses, because the Fair Work Australia regime has made wages too inflexible. Not that I would need to employ many workers, but too many of the input costs that all businesses depend on, such as transport, will be going up, and nothing will come down that gives business any elbow room for increased competition.

Somebody should have told the government that barriers to entry for new businesses actually protect the profits of those incumbents who already have a dominant position. Reducing business cost allows new entrants to take the risk of entering markets and increases innovation. The government spoke a lot about innovation but I don’t see how they’re doing anything to help it. The increase in fuel costs will cause marginal businesses to drop off and there’ll be a slight shift in the direction of monopoly in some markets.

So I’m pretty much canning the whole business plan. You’ll all go on buying ridiculously inefficient energy-guzzling home appliances, because your electrical suppliers don’t know any better or have no reason to care, and because the Australian homewares and home appliances market is almost comically conservative. I just thought I’d share that disappointment with you all. If things had been done differently, it could have been a decent profit for me, a cost saving on electricity for my customers, a pollution reduction for Australia, and a competitive hit against the lazy electrical suppliers who dominate the Australian market.

Heard Tony Abbot on AM this morning – he wouldn’t say the coalition in government would repeal the carbon tax and associated income tax and transfer payment offsets – by my count he refused to give a straight answer to effectively the same question about 4 times. On one hand he is saying this “tax”… “…well,it’s just a bad tax…” will be very “bad” for Australia, and so the Coalition will vote against it in parliament. However, they won’t repeal it if they get elected but claims the next election will be about the carbon tax. Make your mind up. If it is so bad then make a stand Tony and say right now you will wipe the whole system out? You strike me as one of the most cynical politicians of our generation putting your personal self interest ahead of everything and who stands for absolutely nothing.

The Coalition’s first test will be the steel industry subsidy. I understand that this will not be part of the carbon price package because it is opposed by the Greens, so it will need the Coalition’s support to be passed. If the Coalition votes for the steel subsidy even conditionally it will be easier for Labor to argue that the the Coalition’s position is neither consistent nor believable.

What is it with so many Australians that they believe they are overtaxed. The OECD Statistics comparing all major economies quite clearly shows we are in the bottom third of those nations in terms of taxes paid. If we where to actually pay the average for those Nations we would collect an additional $50 Billion a year. Now think how we could improve our Health System, Transport infrastructure, Communications( we could pay for National Broadband in one year) etc.

FC – If you can’t sell your items with electricity prices rising you are a worse sales person than the Govt. As you said “rationally, all these people could still benefit from spending their tax breaks on electricity-saving appliance substitutes” so unless you beleive the majority of the population aren’t rational you should still have a market.

i.e People will soon forget they have had a tax cut or an increase to their pension (which they will always think they are entitled to) and will only remember the last $700 electricity bill (for the quarter) they had and be wanting to reduce it

I do believe there will still be a market for energy efficiency services and products. Not a bad area to invest in.

Amazing that the coal industry is getting a staggering level of compensation – more than it could ever have hoped for – and yet its various representatives are all over the airwaves insisting that the carbon tax spells the end for the industry. Gillard must be wondering why she ever bothered to help them out.

Will it enable Australia to reduce its emissions by 5% by 2020? That depends on the PC and the new Climate Change Authority. If they recommend cuts in assistance and more ambitious targets, and governments accept those recommendations…

Er, that sounds like it’s currently a ‘no’ to me.

And JustThink4Once “The technology of renewable energy is now advancing at an exponential rate, much like computers”, no, that’s just not true.

It is a common (but mistaken) belief that Moore’s Law makes predictions regarding all forms of technology, when it has only actually been demonstrated clearly for semiconductor circuits.

Scott – You may be right about consumers. But things just got tougher for businesses overall, even those that minimize pollution or sell pollution reductions, because they almost all depend on transport or energy. Don’t you think that will be a headwind for new business start-up, and thus a headwind to price competition and innovation?

[so unless you believe the majority of the population aren’t rational you should still have a market.]

Of course, if it’s the case that the majority of the population are not “rational maximiers” then the argument for a market-based system as the most efficient supplier of goods suffers pretty badly.

FC needs to think where his argument leads. Suffice it to say that while not all choice is entirely rational — knowledge is partial, people buy for symbolic and aesthetic reasons as well as for tangible utility — most people most of the time try to get the best deal available. Sometimes, poorly configured markets can create perverse incentives, but that doesn’t undermine the broad principle.

If FC can show cashed up people how to hang onto more of their cash while preserving what they value in their lifestyles, he’s going to make sales. If he’s in difficulty perhaps he’s just no better than Gillard at pitching ideas.

I’m not sure I endorse all of your solutions/responses. I’m not in favour of a luxury car tax. I’d be happier with a non arbitrary system of road usage pricing, (which I won’t reapeat here). Lifting the rate of the GST and channelling that into transfer payments to the relatively disadvantaged would be tidier. Progressively removing tax deductibility for very large salary differentials would also be more effective.

I’d favour volumetric taxation of alcohol. One could moderate the rate where preparations were sweeter than the alcohol in its original state — thus RTDs could be taxed also for their “mix”. I’d favour a seriously larger tax per unit of alcohol. {Disclosure: I rarely consume alcohol and then only trivially}

Mining Tax — the original proposal, while it would have led in practice to far greater revenues over the next decade, was also an attempt to move away from royalty-based fees to profits based taxes. So it was more rational AND fairer. I’ve nothing against mining companies providing they pay their fair share, observe reasonable environmental and OH &S standards and pay their employees fair wages. Personally, I’d prefer the most significant mining concerns be publicly owned (if not publicly operated).

Private Health Insurance Means Testing Tax – this is a misnomer as the discussion concerns the availability of a rebate from the state on fees for such a policy. Personally, I’d prefer there were no rebates at all, as this is a clear distortion of the market. I’d like the funds go into either public health services, or that the state setting itself up as a monopsonistic purchaser of services allowed people to choose through an agency which provider best suited them. People could if they wished take out insurance to cover these costs entirely at their own expense. A parallel low income health service scheme would offer dental, mental, GP and other everyday services to people on low to middle income with co-contributions based on means.

Such a change would be quite radical, and if we are tinkering at the edges, then a means testing level of about $70,000 pa seems fair. {Disclosure: both adult wage earners in my household have private health insurance and earn substantiually more than $70,000}

Carbon tax: Again, a misnomer — it’s an ETS with a fixed price permit phase. I’m all in favour of a robust ubiquitous ETS with no emissions related or direct compensation to industry.

If the top 500 carbon dioxide emitters are to pay, then I must be in the top 500 because my household is out of pocket over $1,200 pa year on year on year and rising. The redhead backstabbng b…h does not have a mandate to do touch the tax rates or impose the carbon tax.

Why won’t Quentin Bryce make the govt call an election NOW. This is not democracy in action. This is a socialistic dictatorship and a sad day for all.

FC – “But things just got tougher for businesses overall” One of the things that han’t got much coverage is the increase in the immediate write off threshold for SBE’s to $6500. While it is only a small thing it willhelp, especially if the spend the $6500 on an asset that generate energy or improves energy efficiency.

Fran Barlow, market systems are not efficient simply by virtue of being market systems. Truly free markets require government to cultivate a transparent, competitive business environment which doesn’t play favourites either politically or by accident. Increasing business costs typically hits new entrants the hardest and therefore favours those businesses that are already dominant. In some circumstances these dominant players can take advantage of the reduced competition by charging cartel prices instead of by innovating their way to cost reductions.

Lorry – “household is out of pocket over $1,200 pa year on year on year and rising” So no tax deductions for you then Lorry? Ever thought of investing in solar panels and $1200pa they would pay for themselves pretty quick!

So a “big polluter” pays his dues under this ridiculous regime, say $500 million. Then he adjusts his revenue by increasing his prices to recover this tax. The consumer cops this impost BUT is compensated by Julia to the full extent – or more – and the world goes on. I see no change to anyone’s behaviour. No change to the MO of the polluter, and absolutely no reduction in emissions. What a crazy conundrum! Julia, you have got it wrong.

For any scheme to be effective it has to hurt someone. This one hurts nobody – in fact as Julia keeps saying, most of us will be winners. What a futile exercise in robbing Peter to pay Paul. And into the bargain, Swan chucks in $4billion to make the numbers stack up! What an uttre shambles.

Very grudging approval from you, Bernard K. Why not at least acknowldge that in getting it to this ‘point it never reached under Kevin Rudd’ is in itself, quote……

“…….. a miracle of political negotiation and constructive compromise that she managed to get the Greens to accept it. Julia’s skills at public communication aren’t as great as I’d hoped but she must be an awesome behind-the-scenes deal-maker, possibly the best Australia has seen. Moreover, given the disparate interests and personalities among the Greens and cross-bench Independents, the only way she would have achieved such an outcome is to have impressed all of them as a leader of great strength, integrity and fundamental decency. You don’t hold together people like Windsor, Oakeshott, Wilkie or the Greens by being mean and tricky.”

[So a “big polluter” pays his dues under this ridiculous regime, say $500 million. Then he adjusts his revenue by increasing his prices to recover this tax.]

If he can “adjust his prices” without loss of market share it shows he’s undercharging — which would raise the question of why he isn’t doing it now. Certainly, were I an equity holder — I’d be asking why he’s giving our assets away cheap.

If I have increased purchasing power I may choose to contniue buying the producers carbon-price-adjusted goods, but then again, perhaps I’ll economise, and/or buy goods from someone else that are comparable in price but less carbon-intensive. The ACCC is one of the bodies that is going to be looking very hard at price gouging too.

In the end, one suspects that some of the cost will be passed on, some will be absorbed by equity holders in reduced profits and some end-users will simply demand less, either by using what they have more efficiently, or simply going without and keeping the cash for things they value more.

Reading Keane is always worth a good laugh. He’s a major warmist who can’t even be bothered reading the science. Forests and soil etc are all identified by NASA’s James Hansen – along with Freeman Dyson – as the only method by which the current excess of carbon from human activity can be removed from the atmosphere.

The natural processes will take far too long ie thousands of years, whereas large reforestation and major changes in farming practises are the only immediate methods available to rip the excess carbon back out of the atmosphere over this century. It’s all there Bernard – in James Hansen’s regular mail outs of his latest science papers. Along with nuclear, advanced biofuels and all the other goodies you spend so much time slagging and bagging while telling everyone to get with the climate program as the science is settled.

I have no idea why your editor’s give you such prominence let alone a weekly wage when you get so much of the climate debate wrong. Seriously now, other than taking direct action using all sorts of technologies across various industries and the like – how else can we actually do anything about a problem other directly doing something different to what we are doing today.

Why do you think Abbott and comapny choose such a tag line. Logically – direct action – is the only course of action that will ever actually make a difference – unless you think Santa Claus will wave a magic wand and pull a rabbit out of a hat and make it all better again – in six days – leaving you time on the seventh day to spin it.

And isn’t it cute that Labor after bagging the Liberal’s “direct action” to use the soils and the trees, have now embraced the concept absolutely, and are funding “direct action” on the farms as part of their package.

Or is that because Uncle Tony Windsor has himself so recently purchased such a huge tract of NSW farmland?

Granor Lewis – The ALP has always had soil sequestraion on farms as part of it’s policy, it’s just that they don’t expcet it to achieve 60% of their reductions and sequest between 75 and 500 times more than the CSIRO predicts is possible.

The key issue with soil carbon sequestration is finding a way to measure it quickly, cheaply and reliably. Until that happens, it is extremely difficult to put soil carbon sequestration into the market.

Once it happens, soil carbon sequestration will likely become a significant element in the slowing the onset of AGW.

Quite right Jimmy. Even at the astonisingly generous rate of biosequestration of 2tCo2e per Ha we would need a square with sides 692km long by 2020 to sequester that much carbon. That land won’t come cheap because this would have at worst to be arable land with access to water. The water won’t come cheap either and you are going to have to maintain the land against loss of vegetation, fire and so forth. Good luck getting that done out of a budget that the state could live with, still less $10bn. Good luck buying up that much arable land and not getting rural folk upset.

Of course, even if you succeed that takes only take care of 2020. Where do you get the other 75-80% of emissions reductions from by 2050? How many chunks of 480,000 Km2 of arable land can you purchase and maintain for all time before you run out? Not that many.

Fran – It isn’t about buying the land, it is about getting farmers to change their farming habits. But the cost is still going to be large, farmers won’t do it for free and a lot won’t want to do it at all.

Michael – This is hard to believe I know but readers of a particular paper generally have similar views, especially when that paper campaigns against the topic of the survey.
Take the Herald Sun, front page today “Smoke and Mirrors; Consumers to pay for Carbon Tax”, do you think that those who read that will have a accurate view of the topic?

Just so Jimmy, but you do see though that the sheer scale of what is prposed simply doesn’t make it plausible. In effect you are agreeing to permanently alienate whole swathes of arable land simply because you were unwilling to cut emissions.

Plants are pretty good at ripping Co2 out of the air, but they do it as part of their lifecycle, not to do us a favour. They return it and recover it. The energy that falls upon the surface that makes this all possible is diffuse while the chemical energy released when we oxidise carbon is highly concentrated — that is why it is useful.

Just as it is far harder to earn money and save it than it is to steal it from someone who already has, so too it’s a hell of a lot easier burning carbon stores built up over the 80 million years of the carboniferous era that it is to plant vegetation, allow it to suck up solar radiation and use that to make sugars and lignins that will stay stable. We need our system to work over decades, not millions of years. If you want to stabilise emissions, the first task is to cut emissions. Soil carbon and other biosequestration can help abate but they are unlikely to do the kind of heavy lifting we need, and certainly not on our timeline or at our preferred cost.

FC – “Don’t you think that will be a headwind for new business start-up?”

Initially, perhaps. There is no doubt a carbon price will add to the risk of a new startup, especially in an energy intensive industry (like freight or manufacturing).
But on the plus side, energy costs are variable costs (more or less). For a start up business, it is fixed costs that are the real enemy (too much going out for the amount coming in). Keep your operating leverage relatively low and a start up (especially in a fast growing industry like energy efficiency) should be able to survive.

Another point is that there is a fair bit of research out there that indicates taxes, while significant, have only a small effect on the level of investment and entrepreneurship in an economy. Wages and financing costs seem to have a greater effect (as the biggest impediments of successful business are the access to capital markets and labour costs which make up a greater % of expenses)

Granorlewis, in your 1:48 pm post you said”For any scheme to be effective it has to hurt someone. This one hurts nobody ” au contriere, it is obvious that it is hurting many, you and Frank Campbell,Lorry,Simon Mansfield,TheTruthHurts etc,common denominator, political affiliations?

As far as the effect of taxation, the Henry tax review commissioned research* which estimated the marginal cost of the last $1.00 of company tax revenue to be the equivalent of $1.40 of consumer welfare. That’s a 30 per cent inefficiency cost born by consumers, because if markets are competitive, the competitors would force each other to pass on the tax saving to consumers.

Ken Henry is now a special advisor to the prime minister, so there’s no way Julia Gillard could be unaware of this. So why didn’t the Climate Change Committee consider recycling the carbon tax as a cut in company tax? Ultimately the compensation for consumers would have been greater (though harder to explain) and the system would have been more more conducive to innovating and reducing pollution.

* Please see taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/papers/Final_Report_Part_1/chapter_1.htm and please scroll down to Box 1.1 at the bottom.

Looks like the TROLLS have stormed the fence. Need back -up. Lorry , Your whinning when your on $150,000 ??? That’s what happens in a free market , things go up. Those chinese and Indian buying all our coal , has put prices up.
TTH – I think Labor STOPPED 2 of Howards TAXES when they turfed out the lying Rodent $ugar Levie and the Milk Levie , a bit hard to get around those taxes. Then we had the Howards Brother’s Company Bail out TAX , Gun TAX , East Timor WAR TAX , Steverdoring Tax and the Ansett TAX. Then the biggest baddest TAX of all GST 10 % tax on everything day after day after day.

Not only did the Howard COALition, with Tony as a senior member thereof, impose more than its fair share of taxes on the Australian public, it then, contrary to the ethos of a hard working frugal rich class deserving their wealth, gave much of that wealth to the richest people in Australia via heavily regressive tax cuts that benefited the rich at the expense of the poor.

Quotes below from “Political Economy of Tax Reform in Australia: Andrew Leigh relating to the tax cuts of billions of dollars of 2005 and 2006

“How do we reconcile the fact that the typical voter does not favour tax cuts with the large
and regressive tax cuts in the 2005 and 2006 budgets? One possible explanation is the
strong tax-cutting campaign that took place between the two budgets. Among those who
fiercely advocated lowering top tax rates during this period were Malcolm Turnbull and
Jeromey Temple (2005), the Business Council of Australia (2005), and the Centre for
Independent Studies (Saunders 2006).

……………………………………

…… the last two [2005 and 2006] Australian budgets have seen substantial reductions
in top marginal tax rates for the richest Australians …”

PS I won’t mention the additional gifts of massive superannuation subsidies , again to the richest in Australia and , yet again, worth billions of dollars.

Hey Luke! A few people here are playing the man not the ball! Pay attention please!

TTH – Where were/are you when all the discussion goes on about ageism in the workforce? How many women over the age of 40 can get jobs these days, or even men have a rough time, or so I hear many times whenever extending the age for retirement or unemployment etc are discussed. I think you need to do some more reading mate!

What jobs are available for women with a 27 yr history or RSI? How long do you think senior citizens should work for? Did you even respond to the comment re an 89 yr old pensioner!

Why won’t someone advocate that CEO’s obscene incomes be cut? Not even mentioned, except by us so-called ‘latte or lefty set’?

Don’t think so Bazza. After two years slumming it here I’ve yet to see a single Leftist join me. Which is why I’ve written a lot about tribalism etc. In 1992, like many Labour voters I went to the Greens. In 2010, 11% of Greens were dubious about the climate cult. In 2011 it’s 17%. It will go on rising. You can’t fool all the left all the time…most Green/Left heretics are too timid to open their mouth…

can’t blame them really…ostracism, insult, the sack…just look at Crikey itself- a hill fort manned by beseiged zealots. They make a mockery of open criticism. Far more tightly controlled than the “Australian”, which is run by an ageing clique of Right wing ideologues and managers, oriented like phototropic plants to the sun, which radiates from Murdoch’s posterior.

I’ve repeatedly asked Crikey medocrities how they would react if one of their number, or one of their circle, exposed themselves as a climate sceptic or denier.

7.30 did a hatchet job again. Professors Barry Brooks , Cook and some other coal sponsored pro fessors. One was after funds for Carbon capture storage ? must have a very big hole to fill ? and also ziggy was on too. Jobs will go overseas Blah blah blahhh.

@GRANORLEWIS – I was being sarcastic. The moderator is often selective! Ignores at will! Incidently, I’m one of the “lefties”?

@BARRY 09 – I watched 7.30 also – sickening isn’t it? They’ve all had years to start getting organised, but they’re so damned greedy that they don’t give a damn. Now they want handouts – the same people probably condemn people on pensions, sole parents etc? Abbott and his “socialism” bs. What does he think $10+ billion per year to the fossil fuel companies is? Actually, I think for this year it’s closer to $11 billion.

Michael – “People who aren’t as literate and intelligent as you” So you want a policy that is popular not a policy that is well thought out. A policy that panders to the ill informed not one that tackles a serious issue seriously. It’s thinking like this that lead to the dark ages.
I have said it before if 1 doctor tells me I have cancer but 100 blokes in the pub say that I don’t I don’t choose the majority I choose the “literate and intelligent” informed and qualifed opinion.

“You will come to know them on election night when they pull out the baseball bats and beat all of your highly educated, well read & elite buddies to a bloody unrecognizable pulp.” Really? I thought they would just go to the polls and vote

FC – “So why didn’t the Climate Change Committee consider recycling the carbon tax as a cut in company tax?”

Well, by the research you have linked to, its labour tax (income tax) cuts that are more efficient than company tax cuts in regards to marginal welfare loss. So Gillard has decided to decrease the income tax paid by the lower income housholds to help account for the increase in prices caused by the carbon price. That has Henry written all over it.

As for company assistance, the mix of targeted assistance to exposed industries plus funds for R&D investment and an allocation of free permits seems like a pretty balanced deal. Thats a personal view of course but there hasn’t been a huge amount of bleating from industry either. A 5-6% hit to EBITDA seems to be the average ASX statement.

But even if that wasn’t the case, company tax would not be cut for one main reason. Politics! The Greens wouldn’t stand for it. They don’t even want the tax rate cut for the MRRT.

“So why didn’t the Climate Change Committee consider recycling the carbon tax as a cut in company tax?”
Another possible reason could be that they expect to get the MRRT through which has reductions in the company tax rate.

Scott – Yes, that’s what I thought at first when Prof Garnaut recommended it. The TFT shift smooths out an ugly bump in the effective tax gradient for low income earners and should lead to some welfare being replaced by jobs. But it won’t lead to as much efficiency increase as it would have in 2007 when the IR regime was more flexible.

What a lot of taxpayers don’t realize is that they still pay everyone’s income tax, as a cost component of the goods and services they buy. If you’re on $18,000 you may be pleased to know that the tax burden has been shifted from you to your manager. But it’s not quite as good as it sounds, because you still pay the income tax of the manager of the bakery from which you buy bread, which in turn pays the income tax of all the workers and managers who make the flour, and so on. If the overall income tax take had been reduced, this would have reduced the costs of goods and services, but that won’t be the case here.

The KPMG Econtech research estimated the excess burden of company tax to be almost twice that of income tax. That’s mostly because of the greater mobility of capital than of labour, but there are other reasons. One of those reasons is highly relevant to innovation, which is one of the key factors for reducing carbon pollution:
[Capital is substitutable for other factors of production. When company tax increases the cost of capital relative to other factors of production, such as labour, firms substitute away from using capital and towards labour. This leads to production technologies that are more costly than would otherwise be the case.]
(( taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/papers/Final_Report_Part_1/chapter_1.htm , page 55 ))

I take this to mean that if the carbon tax package represents an overall increase in the taxation of capital relative to other factors, innovation will be more inhibited than it might otherwise have been. Producers are more likely to deal with increased costs by using brute force of labour instead of technological reforms. Laying off engineers and R&D scientists who have just become more highly taxed and therefore more expensive, and shifting towards more unskilled labour to recoup the carbon tax costs.

Ha ha – my political affiliation is easy. Labor voter – moreover a fully paid up member. Voted greens many times – but wouldn’t give them the time of day now. I use to be utterly convinced that climate science was rock solid and that the world was all going to hell in a hand basket. But as an environmental news publisher for the past 15 years (terradaily.com – solardaily.com etc) I’ve become very cynical about the quality of much of the science. Everyday we get press releases from science labs from all over the world. And some of them are just laughable. Utterly ridiculous claims. While others are moderate in their claims and open to doubt.

What’s most interesting in recent months is that James Hansen has essentially rejected computer based climate modeling and is working overtime on establishing the empirical evidence from the paleo record to support the underlying theory that CO2 is the main driver at all stages of the glaciation cycle. His latest paper is pretty solid on this, and is building more and more evidence that shows how the ice waxes and wanes over time – with CO2 clearly the signature for that change.

He’s working very hard to get the aerosol record incorporated into the data stream and tick that variable box off. Clouds are never going to be accounted for in the paleo climate record other than via extrapolation. Albedo in general is difficult – but can be extrapolated to some degree. And he says it doesn’t really matter other than as a variable that can be calculated on its own and inputted to the energy balance equation.

I still think he is making some assumptions that are questionable and the main threat is not so much to life on earth in a general way – but rather to humans on earth. As he says the Earth was at 1000ppm 50 million years ago and was packed with life from pole to pole.

Hansen offers clear guidance on the importance of reforestation and bio capture via top soil and the like as being the only possible means to remove the excess carbon from the atmosphere. And that both are readily achievable and key to dropping CO2 from 400ppm to 350 ppm. But only if we start real soon. ie yesterday – and stop increasing emissions.

So on balance – the anti forest and soil capture brigade are totally uninformed and as much a danger to the planet as the coal miners.

Overall, I agree excess CO2 is a problem but humans will deal with it this century and that the issue of computers and the rise of AI is a far more serious issue for humanity that will soon dwarf the climate issue as the number one threat to humanity.

Politically – carbon reform will be similar to the history of Medibank/Medicare.

Abbott will have little choice but to kill the carbon tax if he wins the next election. Various BS schemes will operate in its place as happened with Medibank being axed by Fraser – some will have value – like large scale reforestation linked to indigenous issues.

At 2020 I proposed that we replant 200,000 square kms of marginal lands starting west of the Darling river where there would be little resistance from local stakeholders. Sadly that idea went nowhere as the Greens were on their high horses over managed tree funds at the time. Which was mostly about Tasmanian farmers being pissed off at losing their waterflows in the valleys where they farm cows. Remember Ms Milne comes from a dairy family and likes to keep her local dairy voters happy.

The really sad part of this not happening is we have just had the extra rainfall needed to water the trees and get them going. Trees are of course the only way to store water over long periods across much of Australia and would have provided the evaporation needed to seed weak monsoon troughs as they cross Australia – and seriously pump up the big ones. A slightly warmer Australia with a working forest system would probably become self sustaining and utterly change the face of inland Australia.

So much of the climate debate is crap. And sadly key influencers like Crikey and Bernard Keane are as bad as Alan Jones, Barnie and Tony when it comes to polluting the debate with ill informed garbage commentary. I’m not sure how planes will be flying in 30 years time unless they are using biofuels. And seriously Bernard should read some James Hansen science papers and the key parts on reforestation. Maybe then he might have something tangible to contribute other than the endless slag and bag approach he has brought to the debate the past three years.

The political cycle for carbon reform is dead in the water. Labor, Greens and the Indies will vote it through, and Labor will be hounded out of office and Abbott will kill it, and sometime in the 2020s when the evidence for climate change will – according to theory – be so overwhelming there will be no choice but to take drastic action on a global scale. At that point global action will probably take place backed by a major technological fix across multiple fronts including energy production and massive biotech intervention.

For those that are interested in a few simple facts – a field of corn consumes all the CO2 above it to two metres in less than 5 mins. And a trillion new trees would do serious damage to our atmospheric carbon sink leading to a very very cold world.

There’s also an outside chance the weather will go totally screwy in the next 10 years with bitterly cold winters in the Northern Hemisphere sending the whole debate into a complete tailspin as thousands die in snowed in cities that have no power or transport for weeks on end.

Michael – Since when is placing more importance on qualified opinion over ill informed bleating a form of communism? A quick look at the history of Australian (and many other countries) politics will show many many decisions that were unpopular at the time but were later shown to be brilliant idea’s.
We elect our govt’s by popular vote but that doesn’t mean they need to put being popular over good policy. If the ALP loses the next election but has achieved a price on Carbon then they can be proud of there contribution.
Abbott on the other hand has proposed tax cuts to be paid for from “savings in the budget”, a direct action plan, to be paid for from “savings in the budget”, a ridiculously generous parental leave scheme to be partly funded by “savings in the budget” but won’t detail where these billions of dollars of savings will come from. The one area he has indicated is cutting 12,000 public service jobs but his direct action plan will require thousands of new public servants to administer it. These idea’s may all be popular but they are far from good policy.

Thanks for that Simon. Definitely the most incisive piece I have seen written this whole month. Makes lots of sense to me – a mere accountant who cares greatly for our planet, and who can’t stand the nonsense that issues from the mouths of today’s politicians.

Trouble is these people do have the power, and only heed the science that suits their agenda. When oh when will Gillard, Swan, Brown etc stop playing politics and act for the true good of the nation.

Simon writes that so much of the science is crap. I say that this whole carbon tax package is crap too – designed only to appease the Greens and keep Julia in the Lodge. To hell with good government – just looking after themselves. Julia claims that she has seen the light – I say she ain’t seen any light at all, just the green rays of doom for her leadership.

Producers are more likely to deal with increased costs by using brute force of labour instead of technological reforms. Laying off engineers and R&D scientists who have just become more highly taxed and therefore more expensive, and shifting towards more unskilled labour to recoup the carbon tax costs.

It sounds to me like you’re suggesting that these reforms could help to arrest the trend of replacing employees with machinery. Sounds like a good way to prevent layoffs to me…

Surely any measure which reduces our labour costs will go quite some way towards redressing the imbalance in competitive advantage, which so many conservative commentators are always lamenting has caused the wholesale transfer of our manufacturing and industrial sectors to countries with lower labour costs?

the main threat is not so much to life on earth in a general way – but rather to humans on earth.

I would agree with the main thrust of this position, wih the clarification that the threat is to the current way of life of humans on earth, and to the sustainability of a population of 6 billion+ humans.
Humans on earth are very unlikely to actually be threatened with extinction by even the most extreme global warming events – it’s just that mass death and misery and a vastly reduced standard of living and civilisation are likely to eventuate.

reforestation and bio capture via top soil and the like as being the only possible means to remove the excess carbon from the atmosphere…So on balance – the anti forest and soil capture brigade are totally uninformed and as much a danger to the planet as the coal miners.

I think you are ascribing a level of malignancy and pigheadedness to critics of soil carbon schemes which is not warranted. In Australia at present, most opposition to soil sequestration is aimed at Tony Abbott’s ludicrous diversionary tactic of suggesting soil sequestration can actually SUBSTITUTE for emissions reductions. All thinking individuals would certainly be open to any process which can sequester carbon – but suggesting that “direct action” along these lines can negate the need to reduce actual emissions, is the truly foolhardy approach.

Overall, I agree excess CO2 is a problem but humans will deal with it this century and that the issue of computers and the rise of AI is a far more serious issue for humanity that will soon dwarf the climate issue as the number one threat to humanity.

Wow, that’s a big call. Sorry to say this but you really know how to undermine your credibility by posting wildly off topic speculation.

@Frank Campbell
“If only. Renewables R and D has been neglected for decades (or, in the case of electric cars, literally crushed by Motown moguls).”

Thank you for raising this point.

The climate change debate has been raging for over ten years and what did the previous government do to encourage a shift to renewables? Nothing. NOTHING!

Had there been some real investment and interest (instead of sticking heads in sand, ignoring the elephant in the room, and watching the money from OUR non renewable resources roll into the government coffers but moreso into the coffers of inappropriately taxed companies) we could have been leading the world (oh but we would not want to put ourselves out like that) in these sorts of technologies and industries.

This government is doing what the Coalition did not have the stomach to do and so failed us.

Direct state investment in renewables R and D is the only thing I like in the otherwise idiotic “carbon tax” plan…but it’s by no means clear how much capital would go to basic research – or whether there’d be critical oversight. We don’t want a repeat of the admin shambles seen 2008-10.

There is a plethora of baseload renewable candidates- that’s the first conundrum. But wind should be scrapped altogether as it fails by definition, not to mention the nasty effects of vast wind “farms” (denied by propagandists like Simon Chapman- which merely alienates the population from renewables generally).

“Oversight” must include alertness to conflicts of interest, as in the case of Flannery who spruiks his geothermal explorer Geodynamics while chairing the Climate Change Commission.

The Cooper Basin geothermal field exposes the difficulties- they’re drilling at the maximum possible depth (5 km), the limits of current technology. You only have to read the blurbs of companies like Geodynamics or Carnegie Wave Energy to realise that hype is infectious. CCS has also been hyped- technically feasible but very expensive.

Energy efficiency can make immediate gains, but climate extremists are not interested in that.

We’re decades away from renewable baseload at a reasonable price. Which is why the “carbon tax” is doomed- it is premature.

Captain Planet:
[It sounds to me like you’re suggesting that these reforms could help to arrest the trend of replacing employees with machinery. Sounds like a good way to prevent layoffs to me…]
Well now the truth comes out: what you really believe in. Reducing pollution is not a high priority for you; arresting the advancement of society is much more important. As Paul Keating once said: “Aggressive conservative, driving in reverse through the rear view mirror.” He was referring to John Howard but he should have described the Greens that way.

Captain Planet – right now the people who own Silicon Valley are investing a lot of money in the science of exponential technology. Go read about the Singularity University – and who is behind it. Across all sectors of science and technology development is accelerating one year to the next. Moore’s Law can be found everywhere in S&T. It’s the future man. Get informed and you might understand just where Human civilization is heading in the next few decades. The moral issues the next few decades of computerization present make climate change child’s play.

Well now the truth comes out: what you really believe in. Reducing pollution is not a high priority for you; arresting the advancement of society is much more important.

You are jumping to extreme and unsupported conclusions which are not warranted by my commentary.
You have speculated about some of the potential negative economic implications of a carbon tax: I have speculated about some of the potential positive implications of a carbon tax.
Nowhere have I suggested that reducing pollution is not a high priority.
It is questionable in the extreme that the decline of our manufacturing sector due to the competitive advantage of low – wage countries, and the increasing mechanisation of industry with its corollary job losses, are “advancement of society” as you imply: but why let contrary opinions get in the way of your pontificating.
I expected better from you.

Oh dear! I just can’t plow through all the bs anymore. It’s so predictable it’s now boring! I’m pleased to hear that the ACC will fine people up to a million dollars if they exaggerate claims re costs? Love it!
Can it please start now? I’m ready!

What about the Lib or NP who’s just invested in coal mining shares, 10,000 of them in fact?
Hislatest comment was, ‘I think he bought the shares prior to the carbon price being announced’? Hullo, Joe. We knew this was coming for months. You’re going to have to do better than that. Truly!

Hasn’t China said that they intend cutting emissions by 80% by 2050? Perhaps less! Aren’t they leading the world in several ways re solar?

It’s interesting to see how abusive some anti carbon price people are, while at the same time complaining about those who disagree with them? What’s that all about?

Over 60% of economists are in favour of putting a price on carbon. How many economists are contributing to this post? What qualifications do you have?

@BLAGGERS – Good for you. Rabbit is now saying that pensioners would be better off under a Coalition Govt. What? We got two little increases in March & Sept under Howard for twelve years. What a liar he is!

When are people going to address the at least 34 LIES of Howard, and Rabbit went along with all of them. There were lies over taxation, costs increased to go to University etc. “No Uni course will cost more than $100,000” – now there’s at least 16 of them! This wasn’t taken to an Election. No referendum – no plebiscite, nothing. Didn’t even get the permission from Parlt over Iraq! I’m sick of the bs, really! Lies and more lies!

Liz 45 -This is from “The Guardian”
“China
Plans have been announced for emissions trading systems to be rolled out in six regions by 2013 and nationwide by 2015. China’s ambitious strategy to cut carbon emissions by 40%-45% by 2020 has been praised by those who claim the commitment from the world’s biggest source of CO2 emissions shows up the US’s indecision on carbon caps. But there are worries that the true impact of China’s increasing number of coal-fired power stations is being masked by the cooling effects of these plants’ sulphur emissions.”

Interesting to that Quebec has announced plans for a cap and trade system with a minimum price of $15 per tonne and British Columbia has a price on Carbon and it’s forecast that California’s price on Carbon will rise from $1 per tonne to $75 by 2020. These three states along with some others are trying to start the north american carbon market.

So despite what the right says (see Bolt’s article today) there is significant action being taken in the rest of the world.

@JIMMY – I won’t look at Bolt’s article as I find him a destructive element in my life. I can imagine what he says. What a hateful person he is. His qualifications re climate change are ????? The same as those on peoples’ aboriginality for instance? I have no respect for him or interest in what he has to say!

However, I AM interested in this article and what you have to say. I understand from what Julia Gillard said on Q & A that China is ‘cleaning up’ its coal fired power stations – new ones? It stands to reason, that if they indicate their intent re reducing Co2 by 2020 or so, they must be going to do something – and soon!80% by 2050?

I’ve just heard on the ABC news, that Malcolm Turnbull wouldn’t comment re his opinion of the price on carbon – just to restate the Coalition “policy”? I think he said heaps, don’t you?

You’ve given reasons in your commentary as to why this is a great idea to follow through.
“Of course rationally, all these people could still benefit from spending their tax breaks on electricity-saving appliance substitutes, making them even better off again.”
What a great selling point.

I’d have to agree that most people are not rational. Most of these are climate change denying, carbon tax whinging, Murdoch reading, supporters of the coalition. Who in their right mind would vote for A-butt? (sorry all for dragging down to this level) I suppose when you’re in the pile long enough you eventually cannot smell the effluent, and even try to convince others that it smells like roses.

@Granorlewis :
“When it all gets too hard for the lefties, they get personal. Sad that – good debate is enlightening but puerile abuse is no use to anyone.”
Are you reading the same posts I am?
Is it very smart to call names: Dillard, bitch, ju liar? People in glass houses…

“Trouble is these people do have the power, and only heed the science that suits their agenda. When oh when will Gillard, Swan, Brown etc stop playing politics and act for the true good of the nation.”
Just in case you didn’t hear about it on Sunday, they are.

@frank campbell
“We’re decades away from renewable baseload at a reasonable price. Which is why the “carbon tax” is doomed- it is premature.”
As I asserted in my first post, had the previous government had the foresight enough to be proactive we’d be a decade closer to renewable baseload. If the current coalition could; admit that they lost the election, understand that there will not be an early election and work with government for the betterment of Australia as a whole, I’d respect them but all they can do no more than be so totally negative.

Blaggers; “had the previous government had the foresight enough to be proactive we’d be a decade closer to renewable baseload.”

True. But they didn’t. Neither did previous govts.

“If the current coalition could; admit that they lost the election…I’d respect them but all they can do no more than be so totally negative. ”

It’s a 2 party adversarial system Blaggers- If positions were reversed, the ALP would be doing the same thing as Abbott. Oppositions are about negativity. Abbott does it well, but Gillard has made it easy for him because she’s made the next election a referendum on the carbon tax. And the carbon tax is very, very, very silly policy. The intention may be good, but it was also good under Rudd (pink batts, BER, cash for clunkers, domestic solar rorts etc etc).

At the extreme risk of setting off Blaggers and the other anonymous fools, I simply respond to Blaggers by asking “what good is this Government doing for the nation?”

Economic stupidity this tax, no chance of doing any good for the nation – now or ever. Sure, spend billions (of taxpayer dollars) shutting down dirty power stations etc, and reduce our CO2 emissions by a miniscule amount in world terms,that’s great but NO overall good for the nation. None at all. And more important NO measurable good for the planet.

Meantime the nation will suffer economic damage on the world scene despite Uncle Wayne telling us that his models show that all will be fine. We’ll see!!

China is ‘cleaning up’ its coal fired power stations – new ones? It stands to reason, that if they indicate their intent re reducing Co2 by 2020 or so, they must be going to do something – and soon!

Indeed they are – close to 80 GW of new nuclear by 2020 (i.e. dozens of reactors), similar amounts of wind and solar and 50 GW of new hydro, in addition to the oft-quoted one new coal-fired power station a week (and these new ones are much more efficient than the dirty old ones that they can close down). Not perfect, but a lot more balanced given their circumstances than the current Australian approach.

Granor Lewis – “Economic stupidity this tax,” If so why do the vast majority of economists support it? Wht do people like John Hewson & Saul Eslake support it. what qualifications do you have that your opinion should be taken over 150 prominent economists that signed a petition supporting it?

@Granorlewis :
“When it all gets too hard for the lefties, they get personal. Sad that – good debate is enlightening but puerile abuse is no use to anyone.”
“At the extreme risk of setting off Blaggers and the other anonymous fools, I simply respond to Blaggers by asking “what good is this Government doing for the nation?””

Hmmm…. what was that about personal attacks?

To quote Star Wars “Who is the greater fool, the fool or the fool who follows him?” We each believe the other side is being led by a fool. In that context, we are all the greater fools.

What is this government doing for this country? Trying to bring it into the 21st century, something the previous government did not want to do.

We are now having to pay for the free reign that companies have had to pillage our resources and pollute our atmosphere and environment. Time for them to pay, unfortunately at some cost as you have all pointed out, but we cannot just sit idlly by any longer. If you do not like the direction this government is taking, tough. The previous government had their chance and they were booted out because the populice wanted action and change. This is democracy.

With all the hot air coming out, i cannot see how wind farms will fail.

@BLAGGERS – Indeed! But of course the point is, that if Abbott has so much support for his hysteria, why would one of his foot soldiers buy shares, unless he thought it financially worthwhile?

@GRANORLEWIS – There’s been about 150 pieces of Legislation passed by this govt, with the Coalition not voting against any of them – to my knowledge. They’ve done some bleating in the media, but then fallen over on the floor of the parliament. Just hot air for the short grabs on shock jock radio shows or via Murdoch rags etc. Abbott hasn’t put forward one positive policy since August or even before that?

The Rudd Govt increased pensions, while almost 12 yrs of Howard only gave us piffling amounts each March/October. Money has been spent on infrastructure which the Howard govt also neglected – for almost 12 years and there’s more to come, such as an increase in housing to cut back on the high numbers of homeless people across the country. The infrastructure in many schools, 98% of which worked out just fine. There’s been improvements to child care etc, paid parental leave(now there’s only the US in the developed world without paid maternity/parental leave)! Increase in numbers of people electing to be organ donars – a Rudd govt educational program. There’s now a national policy that is making a difference around the country re the scourge of domestic violence. Injection of millions of dollars since ’07 and some States are also making progress in this field – at last! kevin Rudd was the first? male politician to swear the oath!